UK Obsolescence provision

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I have a query regarding obsolete stock write-off and was wondering if anyone can help? I am too hot on stock double entry and this is the first time I have come across this issue.


I have received a list of inventory items to be written off, normally I would DR P&L waste account and CR COS. However these particular items are not strictly waste items and I have been asked to write them off to the 'stock provision' rather than the waste account. My boss mentioned putting them to the stock obsolescence provision account but I am confused as to how this works as this sits in the P&L and I would be DR stock obsolescence provision and CR COS. My boss mentioned this as a better alternative as she didn’t want such a large w/off to hit the P&L.
Any advice would be much appreciated.

I have no real idea about the purpose of the stock obsolescence provision.

Thanks
 

Truemanbrown

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The normal joiurnal is to alter the closing stock in the p & l account and stock in the balance sheet with the journal:-

Dr Closing Stock (p&l) xxx
Cr Stock (BS) xxx

Of course, this will hit the p & l but all you are doing is correctly valuing stock at the lower of cost and net realisable value.
 

Triest123

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I have a query regarding obsolete stock write-off and was wondering if anyone can help? I am too hot on stock double entry and this is the first time I have come across this issue.


I have received a list of inventory items to be written off, normally I would DR P&L waste account and CR COS. However these particular items are not strictly waste items and I have been asked to write them off to the 'stock provision' rather than the waste account. My boss mentioned putting them to the stock obsolescence provision account but I am confused as to how this works as this sits in the P&L and I would be DR stock obsolescence provision and CR COS. My boss mentioned this as a better alternative as she didn’t want such a large w/off to hit the P&L.
Any advice would be much appreciated.

I have no real idea about the purpose of the stock obsolescence provision.

Thanks
=> Stock provision is an estimated amount so as to reduce the value of the inventory (i.e.
impairment of inventory. It is also treated as an unrealised loss of the inventory


Dr Trading profit - stock provision
Cr Provision for obsoleted goods
 

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